The company's patent operation business is continuous and extensive. The company has a number of core technology patents in the field of flash memory applications and mobile storage, with a complete patent layout and a "patent pool" protection. The basic and difficult replacement of the company's patent technology, as well as the extensive scope of patent coverage and infringement, effectively support the continuity and extensiveness of the company's patent operation business.

It is expected to become a revenue blowout period for patent licensing in the next few years. The company has formed patent authorization cases with some large international enterprises. With the enhancement of the company's financial strength, customs patent protection and other ways will effectively enhance the effectiveness and convenience of the company's patent protection. The company's patent licensing revenue is expected to grow by more than 60% from 2010 to 2011.

Product operation business is expected to come out of the trough. Due to the economic crisis and the cyclical impact of the industry, the company's product sales revenue declined in 2008. Under the premise of the economic recovery, the recovery of the industry and the further strengthening of the company's marketing network, the company's product sales growth is expected to reach about 30 per cent in 2010-2011, and the product gross profit margin is basically stable.

Profit forecast: the EPS of the company from 2009 to 2011 is expected to be 0.59,0.83,1.27 yuan respectively, and the dynamic PE corresponding to the issue price of 39 yuan is 66,47,31 times. We think that the company's 40-45 times PE in 2010 is more reasonable, and the corresponding share price is 33.2-37.4 yuan.

Risk hint: there is great instability in patent income, the company's product sales are affected by the periodicity of the industry, and the price of flash memory of major raw materials fluctuates greatly.